Social media companies report mixed results in Q1

Trevir Nath, Estimize director of content

Published 2:46 PM ET Wed, 27 April 2016
Estimize

Ashlee Espinal | CNBC

Facebook, LinkedIn, Twitter on smart phone

Whether it's Facebook, Twitter, or LinkedIn, social media has become an integral part of our day-to-day lives. These companies have been successful on the premise that we must know what each other is doing at a moment's notice. Now that they are all publicly traded companies, lofty expectations have been placed on them to grow their user base, increase revenue, and expand out of social media, all at the same time.

Facebook has largely lived up to the challenge while Twitter and LinkedIn have been caught in the crossfire. Despite robust year-over-year growth and better than expected earnings, Twitter and LinkedIn continue to tumble on weak guidance. This week, we get first-quarter results from all three companies with past trends expected to continue.

Twitter kicked things off Tuesday with mixed results that continue to disappoint Wall Street. The social media company reported first-quarter earnings of 15 cents on $594.5 million in revenue. This beat the Estimize consensus data by 3 cents on the bottom line but fell short on revenue by nearly $15 million. Twitter concluded its earnings call with weak sales guidance that sent the stock plunging. Shares dropped about 15 percent in after-hours trading following the report.

Twitter said its expects second-quarter revenue between $590 and $610 million, well below analysts' estimates of $651.33 from the Estimize community. Despite weak guidance, Twitter shocked investors with 3 percent gains in monthly active users compared to a year earlier. The company's stock has suffered all year, down nearly 25 percent over ongoing concerns about user growth.

A large portion of Twitter's growth was driven by the strength of advertising revenue. This quarter, ad revenue came in 37 percent higher than a year earlier with mobile ads accounting for 88 percent of total revenue. Twitter has relied on ad revenue to a fault and must diversify its portfolio much like Facebook has done in the past few years.

Facebook, on the other hand, can do no wrong in the eyes of Wall Street. The stock is now up 32.34 percent in the past 12 months primarily driven by strong earnings and robust growth in several key areas. Full year 2015 was highlighted by double-digit gains in revenue, daily and monthly active users, and mobile users. Compared with its peers, Twitter and LinkedIn, Facebook is leaps and bounds ahead in active users.

Read More Facebook aims to drive down tech prices to expand its reach

The crowdsourced consensus is currently expecting earnings per share of 66 cents on $5.31 billion in revenues, reflecting an over 50 percent increase on both the top and bottom line. Unsurprisingly, estimates have soared since its last report with profit estimates rising 12 percent on a 6 percent increase in revenue.

Facebook's biggest moves have come outside of its core business. Unlike its peers, the social media company has rampantly expanded its portfolio through a number of strategic acquisitions including WhatsApp, Oculus Rift, and Instagram. All of these names have performed remarkably well and with virtual reality becoming the next big thing, Facebook is poised for continued success.

LinkedIn caps of the week with its first-quarter report on Thursday. Similar to Twitter, LinkedIn's robust growth has not been enough to appease investors. Soft guidance following its fourth-quarter earnings sent the stock plunging over 40 percent.

Analysts are expecting earnings per share of 64 cents, down 17 percent in the past three months, on $832.28 million in revenue according to crowdsourced consensus data.

LinkedIn's efforts to get professionals excited about its social networks are not paying off as quickly as Wall Street expected. Still, the company is gaining traction across many key areas including its mobile app, active job listings and international expansion. New products and recent acquisitions such as LinkedIn Elevate and Lynda.com have shown encouraging early results.

While Facebook, Twitter and LinkedIn all operate in the flourishing social media space, their three experiences continue to be exceedingly different. This week we'll see if Facebook can differentiate itself from the pack even further.

How do you think these names will report this week? Be included in the Estimize consensus by contributing your estimates here!